Tuesday, March 30, 2010

We've been getting calls and emails for days from people who want more details on what the federal health reform law will do, for whom, and when.

We're working on several web pages that will address just that. In the meantime -- and in one handy place -- listed below are some of the most comprehensive and reader-friendly summaries we've seen so far.

First, though, here's an update on one of the biggest surprises about the legislation: That the wording left it unclear whether insurers could continue to deny coverage to children with pre-existing medical conditions. The intent was not to. But until last night, it was unclear whether insurers would accept such kids before 2014.

The Associated Press and others have now reported that the industry's top lobbyist said that insurers will accept new federal regulations aimed at dispelling the uncertainty over this issue. The headline says it all: Insurance industry agrees to fix kids coverage gap.

Here are some of the best summaries we've seen of what's in the law and how it would work:

A surprise rebellion by a majority of insurance regulators Sunday reversed key elements of a landmark regulation requiring the nation's largest industry to publicly disclose its efforts to address climate change. Companies can now submit their answers confidentially in most states.

..."To me personally it was very disappointing," said Mike Kreidler, the insurance commissioner of Washington state and vice chairman of the task force that developed the survey.

"The dynamics started to change after Copenhagen," he added, saying that political unrest among regulators grew as the controversy around national climate legislation and the controversy over hacked e-mails from climate scientists expanded. "Probably more so, I think, was the conservative backlash that's been somewhat evidenced in the tea bag party movement, somewhat being in denial that there's any problem with climate."

While Congress tries to figure out what to do about its energy and climate change bills, some regulators have been trying to change things on their own. Last year, state insurance commissioners decided insurance companies had to disclose what global warming might mean for their profits and losses. A year of lobbying by those insurance companies later, and the commissioners have changed their minds.

Within minutes of yesterday's bill signing, our office invited more than 150 insurance companies to take part in a voluntary matchmaking effort called a flood Market Assistance Plan. The goal: pairing companies selling flood coverage with Green River Valley businesses needing it. (The bill doesn't affect homeowners, who typically get adequate coverage through the National Flood Insurance Program.)

Businesses struggling to find flood coverage due to a weakened dam in south King County may soon get some help, thanks to a bill signed into law yesterday by Gov. Chris Gregoire.

Within minutes of the bill signing, Insurance Commissioner Mike Kreidler called on more than 150 insurance companies to voluntarily form a “Market Assistance Plan” (MAP), under the oversight of Kreidler’s office, to help businesses get flood coverage. The bill is ESHB 2560.

Due to concerns about potential flooding below the Howard Hanson Dam, some Green River Valley businesses have said that they can’t find adequate flood coverage. To avoid stressing the dam, the U.S. Army Corps of Engineers has said it temporarily may release more water than usual. Recent work has reduced the chance of serious flooding to 1 in 33. But a complete fix is expected to take at least several years, contingent on federal funding.

“We’re essentially trying to set up a matchmaking service that pairs businesses wanting coverage with insurers willing to sell it,” said Kreidler. “This region is a key part of the state’s economy, with billions of dollars in property and tens of thousands of jobs. We want to make sure that businesses can get the coverage they need to manage this temporary risk.”

The voluntary Market Assistance Plan is the first of several potential steps approved by lawmakers and Gov. Chris Gregoire to help bolster flood coverage in the valley. If the voluntary approach doesn’t work, Kreidler has the authority to compel insurers to form a “joint underwriting association,” which would act as an insurer of last resort.

“The good news is that for most homeowners and some businesses, the federally-run National Flood Insurance Program provides adequate coverage,” said Kreidler. “And that coverage is widely available and relatively inexpensive. We strongly encourage Green River Valley residents to consider signing up for that first.”

Since federal coverage is capped at $500,000 per structure and $500,000 for contents, however, it’s often not enough for businesses. Also, the federal program doesn’t provide business-interruption coverage, which can be critical.

“I hope this voluntary approach works, but it will depend largely upon how many insurers participate,” said Kreidler. “If necessary, we’ll take additional steps.”

For more information, including a copy of Kreidler’s letter to insurers, a list of companies that received it, and frequently asked questions about the plan, please see http://www.insurance.wa.gov/MAP.shtml

The industry press, like Insurance & Financial Advisor and National Underwriter, have covered this a lot in the past few days, but it hasn't been mentioned much in the general media: The National Flood Insurance Program has (again) been allowed to expire.

That means that the federal flood program -- which is the first place most people go to to find flood coverage, insurance that in many cases is required by their banks -- cannot sell new policies. And Congress has gone on a two-week break.

How big a problem is this? Probably just a short-term one. (This has happened repeatedly.) In a March 29 memo, a FEMA official said that Senate Majority Leader Harry Reid's office said that the bill that restores the authority for the program "will be the Senate's first item of business when they return to session April 12th. Reid's office also said that the Program will be extended retroactively to make up for the time it expired."

In a useful list of Frequently Asked Questions, FEMA says that most of the 5.6 million flood insurance policyholders will not be affected. Policies in place will remain in force. Claims will still be paid.

But during the lapse, the program cannot issue new policies, boost coverage on existing policies, or issue renewal policies. The biggest concerns are likely to be from folks trying to renew coverage or buy it as a requirement for getting a mortgage. The FAQs listed above have some specifics on how things will work during the lapse (i.e. if the premium payment was made from the escrow account as part of the loan closing, the policy may be issued.)

State insurance regulators today took control of two Robertson County companies that have been accused of selling illegal health insurance policies to thousands of consumers nationwide.

The Tennessee Department of Commerce and Insurance appeared to be in control this morning of the Springfield offices of Smart Data Solutions LLC and American Trade Association. The companies have been accused by insurance regulators in at least 20 states of selling bogus health insurance policies to unspecting consumers nationwide.

Tennessee officials, the paper reports, are asking a court to put the businesses into receivership.

Here in Washington, we're well acquainted with these companies. In January, we issued this cease and desist order against them, ordering them to stop selling illegal health insurance products here.

Many insurers, as a condition of doing business here, are required to file a lot of information with us: their financial reports, copies of their policies, sales data, etc. This allows the state to ensure that insurers are able to make good on their promises, and helps us protect consumers from getting ripped off.

If you live in Washington and have purchased this coverage, please call our consumer hotline at 1-800-562-6900.

Washington state Insurance Commissioner Mike Kreidler this week was interviewed by TVW's Austin Jenkins on the new federal health reform legislation.

Among the topics: the mandate, starting in 2014, requiring people to have coverage or to pay fine.

From Kreidler:

"Clearly there are costs that are borne in the system, but there are also benefits that are generated from them, not the least of which is when you end up having an individual mandate.

...There's personal responsibility. I think personal responsbility's an important thing.

If you choose not to have health insurance, and you say `I don't want to buy insurance, I shouldn't be told that I have to buy it' and yet you wind up with a traumatic injury or you're diagnosed with cancer or you're admitted to the hospital -- you're effectively incurring costs that then are pushed back on the rest of us.

I have to write a check then for you to cover you. It's built into my premiums. It's added to my costs.

For a family of four that is insured it's estimated by the Kaiser Family Foundation that in fact you are writing a check of $1,000 a year to pick up the people without health insurance."

Public radio's KPLU did a great story recently: "Recession fuels health insurance scams."

Full disclosure: the story's based on info from our office, so yes, we're kind of touting ourselves here. Still, the story's a good summary of how questionable health insurance markets itself and what to watch out for.

Wednesday, March 24, 2010

This is a statement put out Monday by Washington state Insurance Commissioner Mike Kreidler about Attorney General Rob McKenna's decision to join a multi-state lawsuit opposing parts of the new federal health reform legislation:

“I was deeply disappointed to hear that Attorney General McKenna plans to fight the federal health-reform legislation.Washington is home to nearly 1 million people with no health coverage. The status quo is simply unsustainable, both financially and morally. Far too many families – through no fault of their own –are one diagnosis away from bankruptcy.The battle over health care has been far too bitter and partisan. Personal mandates have been talked about over the years by both Democrats and Republicans, including the late Sen. John Chafee, R-R.I., who proposed an individual mandate in 1993.It’s my hope that we come together as a state to enact reform, rather than let families continue to suffer while lawyers battle in the courts.”

Monday, March 22, 2010

The health care reform bill passed by the U.S. House Sunday will cut the number of uninsured in Washington state by more than 500,000, provide better coverage to those with insurance, and save $500 million in uncompensated care – health care that’s delivered in Washington state but not directly paid for.

“For decades, our health care system has failed millions of people – driving them and their families into bankruptcy, letting treatable diseases fester into health crises, and invisibly leeching billions of dollars from our economy,” said Washington state Insurance Commissioner Mike Kreidler. “The health care reforms passed today will transform our country and our state.”

The law includes many reforms that will take place quickly (in most cases within 6 months):

• No more denials of coverage for children with pre-existing medical conditions.

• No more $1 million lifetime cap on benefits.

• No more co-pay for preventive care.

• Medicare beneficiaries will get a $250 rebate to help pay prescription drug costs once they hit the “doughnut hole,” a gap in coverage after the first $2,830 a year in benefits. Starting next year, seniors will get a 50 percent discount on brand-name drugs. The gap will be eliminated by 2020.

• Dependent coverage is extended to age 26.

• The bill provides $5 billion to make coverage for people in high-risk pools more affordable, likely in the form of subsidies.

• Individuals buying their own health insurance will no longer have to take a health screen for pre-existing conditions – they’ll be guaranteed coverage.

• Limits on what insurers can charge for out-of-pocket costs.

• Small businesses will get tax credits to help them buy health care.

• Medicare reimbursements to doctors and other providers will improve.

“This is a victory for the many individuals and families who’ve struggled for years without access to affordable health care,” said Kreidler. “With health care consuming one-sixth of our nation’s economy, the reforms passed today will help speed our economic recovery.”

Update: (3/25): The Associated Press is now reporting that due to the wording of the law re: children with pre-existing conditions, it now appears that insurers will, for the time being, still be able to refuse coverage for these children. "Administration officials are now scrambling to fix" the gap, the AP reports. Here are more details.

Friday, March 19, 2010

“Call right now, and you’ll also receive free vision and dental coverage!”

That quote is from a recent video pitch for one association’s health coverage. The problem: the plan was illegal. The policies were never filed with state regulators, nor was the insurer registered with the state.

As the economy has soured and health care costs soar, people desperate to find affordable health coverage need to be more wary than ever. What seems like a deal may well turn out to be an illegal plan, with no assurance that medical claims will actually be paid.

“People can get taken advantage of twice in these situations,” said Washington state Insurance Commissioner Mike Kreidler. “They pay the premiums in good faith, thinking they have solid coverage. Then they have problems getting claims paid, and are on the hook for those medical bills, too.”

Among the things to be wary of:

-Unreasonably low costs: One plan offered what sounded like comprehensive coverage for $199, regardless of health history. Consumers should be extremely cautious about plans that promise such bargain-basement rates for generous-sounding benefits. If it sounds too good to be true, it probably is.

-Unusual marketing, such as an unsolicited phone call, fax message or e-mail message.

-High-pressure sales tactics, such as suggesting there’s a special rate that expires unless you sign up immediately.

-Companies that want money up front before they’ll send you information about their products.

-Easy acceptance. Be cautious about companies that promise coverage with little or no health screening or questionnaire. Insurers, particularly those in the individual insurance market, often want to know about pre-existing medical conditions.

-Companies that offer little contact or location information. Be especially cautious if the only contact information is a toll-free number and the person on the phone seems vague or evasive about details.

If you suspect that an offer is really a scam, please call the Washington state Office of the Insurance Comissioner at 1-800-562-6900 to verify that the company is legitimate before you sign anything or provide any financial information to the company.

ScienceBlog -- a source we don't often get a chance to cite on this insurance blog -- reports on a medical journal's study indicating that people hospitalized with gunshot wounds are substantially more likely to die of their wounds if they're uninsured.

Lastly, from the Tampa Tribune: Staged crash sweep nets arrests. Interesting facts from story: hundreds of people were arrested in Florida last year for staging crashes, and Allstate says that fraudulent claims account for $200-$300/year per insured driver.

A West Seattle man has been sentenced to 6 months of electronic home monitoring and must pay more than $26,000 in restitution for first degree theft in an insurance case.
Edward Charles Bailey, 59, reported an on-the-job back injury to his employer in 2006. He was placed on temporary total disability and received disability pay from his employer’s insurer, Alaska National Insurance. Doctors subsequently ruled him unable to return to work.

Five weeks after the injury, investigators working for the insurance company videotaped Bailey working vigorously on his sailboat at a Seattle marina. The sanding, painting, climbing and moving of machinery were all contrary to the physical restrictions imposed by Bailey’s doctors, according to the Washington insurance commissioner’s Special Investigations Unit.

When shown the video, the independent medical examination doctors who had originally seen Mr. Bailey reversed their original opinion as to his ability to work.

Bailey pleaded guilty to the charge. The restitution covers unnecessary medical expenses and disability benefits that he was not entitled to.

Thursday, March 4, 2010

In a 78-19 vote, Congress voted to extend the unemployment benefits late Tuesday night and the president signed it into law. This is good news for many laid-off workers who've also lost their health insurance. If you're laid-off before March 31, you may qualify for a 65 percent premium subsidy to help you pay for your former employer's health plan. Here's more:

Who's eligible for the new COBRA subsidy? People laid-off from their job between Sept. 1, 2008-March 31, 2010 and who worked for an employer with 20 or more employees qualify for the temporary subsidy. The individual's family also qualifies if they were covered by the employer's plan.

Individuals earning more than $125,000 per year and married couples with annual incomes over $290,000 are not eligible for the subsidy.

Also, If an employer goes out of business or stops offering health insurance its employees are no longer eligible for COBRA or the subsidy.

How much is the subsidy and how do people enroll? People who qualify for the subsidy pay 35 percent of the total premium. The U.S. Government will reimburse the employer or insurer for the remaining 65 percent of the premium. Employers must notify former employees if they qualify for the COBRA subsidy.

How long does the subsidy last? The subsidy is good for 9 months.

What if I lost my job, but didn't select COBRA before? Can I still apply for the subsidy? Yes, employers must notify former employees who qualify for the subsidy and employees have 60 days to decide.

Where can I learn more about COBRA and the subsidy? Visit the U.S. Dept. of Labor's Employee Benefits Security Administration page FAQs For Employees About COBRA Continuation Health Coverage or call 1-866-444-3272. Or visit our special COBRA page

A new report, released by the University of Wisconsin's Population Health Institute and the Robert Wood Johnson Foundation, ranks the overall health of each county in each of the 50 states. Key factors in the ranking are how healthy people are and how long they live.

They also look at health impacts such as: smoking, obesity, binge drinking, access to primary care providers, rates of high school graduation, rates of violent crime, air pollution levels, liquor store density, unemployment rates and number of children living in poverty.

So now, what you really want to know: healthiest county? San Juan County. The least healthy? Ferry County. See the full results.

Tuesday, March 2, 2010

The Washington state Senate today approved House Bill 2560, which would allow the insurance commissioner to create a market assistance plan and, if necessary, a "joint underwriting association" if the flood insurance market in Washington's Green River Valley collapses.

Last fall, the Army Corps of Engineers said that a weakened abutment to the Howard Hanson Dam meant that the Corps might have to release substantially more water than usual through the dam for the next few years. As a result, the risk of flooding in the valley below was for a time said by the Corps to be as high as 1 in 3. (Now, after significant work on the dam, the Corps says the risk has been reduced to 1 in 33.)

As a result, many businesses in the flood plain last fall reported major difficulties in finding flood coverage to insure above the National Flood Insurance Program's maximum: $500,000 for a commercial building and $500,000 for contents. Many businesses in the heavily industrialized area have more at risk than that, particularly if one factors in business-interruption losses.

In response, state insurance commissioner Mike Kreidler requested legislation giving him the authority to create a market assistance plan -- a sort of match-making service between people seeking insurance and those selling it -- and allowing for the creation of a Green River Valley JUA.

Insurers might be required to participate in the market assistance plan. If that doesn't ease the crisis, the next step would be a joint underwriting association. Known as JUAs, these serve as a publicly-organized insurer of last resort when an insurance market collapses. The insurance wouldn't be cheap -- the underwriting still has to be actuarially sound, with a $5 million maximum per policy -- but at least it would be available for businesses desperate to mitigate their risk. (The JUA insurers' liability is also capped at $250 million.)

The bill passed the House last month, and Sen. Jean Berkey led the floor action as the Senate passed it Tuesday, 28-17. (See video below.) It now goes to Gov. Chris Gregoire.

The Insurance Information Institute came out today with an interesting analysis of the differences in insurance coverage between Haiti and Chile, both of which has suffered major earthquakes in recent days.

According to the I.I.I.'s Robert Hartwig, Chilean building codes are also among the strictest in the world, largely due to a devastating quake there in 1960.

The numbers are startling, both in terms of lives lost (Haiti 200,000+, Chile 723 so far) and insurance coverage ($2.3 billion in premiums for coverage in Chile in 2008, versus $19 million in Haiti).

What about us? Well, the group also notes that earthquakes in the United States are not covered under standard homeowners or business insurance policies, and that even in California, the state believed to be most at risk of a catastrophic quake, only 12 percent of homeowners carry quake coverage.

The link above also includes a list of 10 largest earthquakes in Chile in recent history, as well as a list of the 10 most costly quakes in the world.

Monday, March 1, 2010

The National Underwriter covers how many federal programs -- including the National Flood Insurance Program -- are in limbo thanks to a failure of the Senate to vote on extensions. Unemployment benefits and COBRA benefits also are stalled until the Senate takes action, hopefully later this week.

And our favorite from today's news roundup: Watch out for the bovine exclusion. The Arkansa Democratic Gazette tells the story of a women who came home to not one, but two cows in her home. Sadly for her, her claim was denied. See full story and photos.